Exhibit 99.1

 

Popular, Inc. Announces Third Quarter 2019 Financial Results

 

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Net income of $165.3 million in Q3 2019, compared to net income of $171.1 million in Q2 2019.

 

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Net interest margin of 4.00% in Q3 2019, compared to 4.11% in Q2 2019.

 

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Credit Quality:

 

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Non-performing loans held-in-portfolio (“NPLs”) decreased by $6.6 million from Q2 2019; NPLs to loans ratio remained at 2.1% from Q2 2019;

 

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Net charge-offs (“NCOs”) increased by $20.7 million from Q2 2019; NCOs at 1.01% of average loans held-in-portfolio vs. 0.71% in Q2 2019;

 

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Allowance for loan losses to loans held-in-portfolio at 1.90% vs. 2.01% in Q2 2019; and

 

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Allowance for loan losses to NPLs at 91.9% vs. 96.3% in Q2 2019.

 

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Common Equity Tier 1 ratio of 17.46%, Common Equity per Share of $60.57 and Tangible Book Value per Share of $53.41 at September 30, 2019.

SAN JUAN, Puerto Rico — (BUSINESS WIRE) — Popular, Inc. (the “Corporation,” “Popular,” “we,” “us,” “our”) (NASDAQ:BPOP) reported net income of $165.3 million for the quarter ended September 30, 2019, compared to net income of $171.1 million for the quarter ended June 30, 2019.

Ignacio Alvarez, President and Chief Executive Officer, said: “The third quarter was another solid one as we continued to build on the strong performance of the first half of the year. While results reflect higher operating expenses due to investments in key areas such as technology, compliance and our people, we maintained our net interest income stable despite the interest rate environment, increased our non-interest income and benefited from a lower provision expense. We added 12,000 new clients and increased consumer loan balances in Puerto Rico and grew our commercial and mortgage portfolios in the United States.”

 

Earnings Highlights
(Unaudited)		Quarters ended												Nine months ended
(Dollars in thousands, except per share information)		30-Sep-19				30-Jun-19				30-Sep-18				30-Sep-19				30-Sep-18
Net interest income		$	476,991			$	476,316			$	451,469			$	1,424,270			$	1,258,652
Provision for loan losses			36,539				40,191				54,387				118,555				183,774
Provision for loan losses - covered loans [1]			—				—				—				—				1,730
Net interest income after provision for loan losses			440,452				436,125				397,082				1,305,715				1,073,148
FDIC loss-share income			—				—				—				—				94,725
Other non-interest income			142,712				138,326				151,021				417,468				404,602
Operating expenses			376,475				363,015				365,437				1,086,910				1,025,107
Income before income tax			206,689				211,436				182,666				636,273				547,368
Income tax expense			41,370				40,330				42,018				131,923				35,613
Net income		$	165,319			$	171,106			$	140,648			$	504,350			$	511,755
Net income applicable to common stock		$	164,389			$	170,175			$	139,718			$	501,558			$	508,963
Net income per common share - basic		$	1.71			$	1.77			$	1.38			$	5.17			$	5.01
Net income per common share - diluted		$	1.70			$	1.76			$	1.38			$	5.16			$	5.00

 

[1]	Covered loans represent loans acquired in the Westernbank FDIC-assisted transaction that were covered under the terminated FDIC Shared-Loss Agreements.

Net interest income

Net interest income for the quarter ended September 30, 2019 was $477.0 million, compared to $476.3 million for the previous quarter. Net interest margin was 4.00% for the quarter, compared to 4.11% for the previous quarter.

The increase of $0.7 million in net interest income is mainly the result of $5.4 million from higher volume of earning assets and a $3.8 million positive impact of one more day in the third quarter. This increase was partially offset by $8.5 million due to lower yields mainly from the impact of the 25 basis point decreases in the Fed Funds rate that occurred at the end of July and in mid-September 2019.

Significant variances were:

 

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Higher income from money market, trading and investments by $1.9 million due to higher volume, mostly driven by an increase in public sector deposits at Banco Popular de Puerto Rico (“BPPR”); and

 

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Higher income from the consumer loan portfolio by $1.7 million, due to higher loan volume in the BPPR segment driven primarily by an increase in auto loans and leases and consumer loans originated through BPPR’s E-loan channel.

Partially offset by:

 

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Lower interest income from the commercial loan portfolio by $2.7 million, principally due to lower market rates in the adjustable rate portfolio, the impact of the payoff of a large loan on the purchased credit impaired portfolio and originations in the U.S. in a lower interest rate environment; and

 

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Higher interest expense on deposits resulting from higher average balances mainly in the P.R. public sector and digital deposit channel in Popular Bank (“Popular U.S.” or “PB”) and the impact of one more day in the quarter of $0.9 million. Cost of interest-bearing deposits decreased 4 basis points driven mainly by the decrease in cost of public sector deposits in P.R. offset in part by an increase in the cost of digital channel deposits in Popular U.S.

BPPR’s net interest income amounted to $412.2 million for the quarter ended September 30, 2019, compared to $411.5 million for the previous quarter. Net interest margin for the third quarter of 2019 was 4.26%, a decrease of 11 basis points when compared to a net interest margin of 4.37% for the previous quarter. The decrease in net interest margin was mainly due to higher average volume of investment securities, which carry a lower yield, and a decrease in the yield of the money market portfolio and of the commercial loan portfolio as a result of lower market rates. Also impacting net interest margin was the payoff of a large commercial loan included in the purchased credit impaired portfolio, as mentioned above, and a lower discount amortization of the loan portfolio acquired from Wells Fargo in 2018 (the “Reliable Transaction”), partially offset by a lower cost of deposits. BPPR’s earning assets yielded 4.83%, compared to 4.98% in the previous quarter, while the cost of interest-bearing deposits was 0.77%, or 6 basis points lower than the 0.83% reported in the previous quarter. Total cost of deposits for the quarter was 0.61%, compared to 0.64% reported in the second quarter of 2019. The impact of one more day in the quarter represented approximately $3.1 million in additional net interest income at BPPR.

Net interest income for Popular U.S. was $74.4 million for the quarter ended September 30, 2019, compared to $74.6 million during the previous quarter. The decrease of $0.2 million in net interest income was primarily due to higher cost of deposits, as explained above, partially offset by higher volume of commercial and mortgage loans. Net interest margin for the quarter decreased 14 basis points to 3.29%, compared to 3.43% for the previous quarter. Earning assets yielded 4.60%, compared to 4.71% in the previous quarter, while the cost of interest-bearing deposits was 1.63%, compared to 1.59% reported for the previous quarter. Total cost of deposits for the quarter was 1.40% compared to 1.37% reported in the second quarter of 2019. The impact of one more day in the quarter represented approximately $0.6 million in additional net interest income at PB.

Non-interest income

Non-interest income increased by $4.4 million to $142.7 million for the quarter ended September 30, 2019, compared to $138.3 million for the quarter ended June 30, 2019. The increase in non-interest income was primarily driven by:

 

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Higher service charges on deposit accounts by $1.4 million, mainly at BPPR, due to higher fees on transactional cash management services; and

 

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higher income from mortgage banking activities by $12.3 million, mainly due to the unfavorable adjustment on mortgage servicing rights (“MSRs”) of $17.2 million recorded during the previous quarter driven by higher estimated prepayment and lower earnings rate due to lower interest rates, compared to an unfavorable adjustment of $4.8 million this quarter.

These variances were partially offset by:

 

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Lower other service fees by $2.7 million, mainly in insurance fees, due to $3.5 million in contingency insurance commissions received during the second quarter of 2019, partially offset by higher credit card fees;

 

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unfavorable variance in adjustments to indemnity reserves on previously sold loans of $5.3 million due to the release of a $4.4 million reserve taken in connection with a 2013 transaction settled during the second quarter of 2019; and

 

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lower other operating income by $0.8 million, principally due to lower gains on sales of daily rental units by $0.7 million and lower recoveries of previously charged-off loans from the portfolio acquired as part of the Reliable Transaction by $0.6 million, partially offset by higher net earnings from the portfolio of investments under the equity method by $0.4 million.

Refer to Table B for further details.

Operating expenses

Operating expenses for the third quarter of 2019 totaled $376.5 million, an increase of $13.5 million when compared to the second quarter of 2019. The increase in operating expenses was driven primarily by:

 

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Higher personnel cost by $6.2 million due to higher salaries by $3.9 million as a result of annual merit increases during the quarter and a higher headcount, and an increase of $3.2 million related to annual incentives, including the Corporation’s Profit-Sharing Plan, tied to the Corporation’s financial performance. Through the three quarters ended September 30, 2019, the Corporation has accumulated a total of $19.4 million in anticipated profit-sharing expenses;

 

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higher professional fees by $3.3 million, mainly due to higher advisory expenses by $4.8 million related to Corporate initiatives and higher programming, processing and other technology services by $2.1 million, partially offset by lower legal fees by $2.0 million; and

 

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higher other operating expenses by $6.0 million due to higher operational losses, including legal contingency reserves by $4.1 million and a $2.6 million loss related to an undeveloped corporate site which was placed for sale.

These increases were partially offset by:

 

•

Lower FDIC deposit insurance by $2.4 million, mainly due to the small bank assessment credit received at Popular Bank.

Full-time equivalent employees were 8,457 as of September 30, 2019, compared to 8,372 as of June 30, 2019.

For a breakdown of operating expenses by category refer to Table B.

Income taxes

For the quarter ended September 30, 2019, the Corporation recorded an income tax expense of $41.4 million, compared to $40.3 million for the previous quarter. During the third quarter of 2019, the Corporation recorded a tax benefit of $4.3 million related to revisions to the amount of exempt income for the current year. During the second quarter of 2019, the Corporation recorded a tax benefit of approximately $6.3 million related to adjustments pertaining to tax periods for which the statute of limitations had expired. The effective tax rate (“ETR”) for the third quarter of 2019 was 20%. Excluding the exempt income adjustment discussed above, the ETR for the quarter would have been 22%.

In the fourth quarter of 2019, in connection with the filing and true up of the Corporation’s 2018 Puerto Rico tax return, the Corporation will also amend its tax returns for the years 2015-2017, which will include a revision of the amount of exempt interest income resulting in a positive tax adjustment within a range of $15 million to $20 million.

The ETR of the Corporation is impacted by the composition and source of its taxable income. For the year 2019, the Corporation expects its consolidated effective tax rate to be within a range of 20% to 22%.

Credit Quality

NPLs for the BPPR segment for the third quarter of 2019, remained relatively flat from the second quarter of 2019. However, charge offs for the BPPR segment increased mainly as a result of previously reserved commercial loans and revisions to the auto loans charge-off policy. Credit quality metrics of our U.S. operation remained favorable. The Corporation continues to be attentive to the performance of its portfolios and related credit metrics. The following presents credit quality results for the third quarter of 2019.

 

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Inflows of NPLs held-in-portfolio, excluding consumer loans, increased by $39.6 million quarter-over-quarter, primarily related to troubled debt restructured commercial real estate loans at BPPR.

 

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Total non-performing loans held-in-portfolio decreased by $6.6 million from the second quarter of 2019. The BPPR segment NPLs remained essentially flat reflecting lower mortgage and consumer NPLs of $13.0 million and $4.3 million, respectively, offset by higher commercial NPLs of $17.2 million. The PB segment NPLs decreased by $4.9 million mostly due to charge-offs. At September 30, 2019, the ratio of NPLs to total loans held-in-portfolio remained at 2.1% from the second quarter of 2019.

 

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Net charge-offs increased by $20.7 million from the second quarter of 2019, primarily driven by higher BPPR commercial and consumer NCOs of $10.4 million and $9.4 million, respectively. The commercial NCOs increase was mainly driven by the abovementioned previously reserved restructured commercial real estate loans, for which impaired amounts were charged-off during the quarter. The increase in consumer NCOs was mainly related to revisions and alignment in the auto loans charge-off policy. The Corporation’s ratio of annualized net charge-offs to average loans held-in-portfolio was 1.01%, compared to 0.71% in the second quarter of 2019. Refer to Table J for further information on net charge-offs and related ratios.

 

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The allowance for loan and lease losses (“ALLL”) decreased by $31.3 million from the second quarter of 2019 to $512.4 million. The BPPR segment ALLL decreased by $25.4 million, principally driven by lower reserves for the commercial portfolio prompted by charge-offs taken during the quarter on previously reserved loans, a $8.2 million reserve release from a $40 million loan relationship, in the ASC 310-30 portfolio, sold during the quarter, and continued improvements in the loss trends of the mortgage portfolio. These decreases were offset in part by higher reserves for auto loans mainly related to the growth of the portfolio. PB’s ALLL decreased by $5.9 million, principally due to lower reserves for the U.S. taxi medallion portfolio.

 

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The general and specific reserves totaled $416.5 million and $95.8 million, respectively, at quarter-end, compared with $443.6 million and $100.0 million, respectively, as of June 30, 2019. The ratio of the allowance for loan losses to loans held-in-portfolio was 1.90% in the third quarter of 2019, compared to 2.01% in the previous quarter. The ratio of the allowance for loan losses to NPLs held-in-portfolio stood at 91.9% compared to 96.3% in the previous quarter.

 

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The provision for loan losses for the third quarter of 2019 decreased by $3.7 million from the prior quarter as a result of positive adjustments in certain qualitative reserves, the release from the loan relationship sold during the quarter, and lower loss trends in the mortgage portfolio. The provision to net charge-offs ratio was 53.9% in the third quarter of 2019, compared to 85.2% in the previous quarter.

Non-Performing Assets

 

(Unaudited)
(In thousands)		30-Sep-19				30-Jun-19				30-Sep-18
Total non-performing loans held-in-portfolio		$	557,792			$	564,358			$	632,488
Other real estate owned (“OREO”)			117,928				118,851				133,780
Total non-performing assets		$	675,720			$	683,209			$	766,268
Net charge-offs for the quarter		$	67,840			$	47,153			$	63,687
Ratios:
Loans held-in-portfolio		$	27,007,975			$	27,005,745			$	26,512,168
Non-performing loans held-in-portfolio to loans held-in-portfolio			2.07	%			2.09	%			2.39	%
Allowance for loan losses to loans held-in-portfolio			1.90				2.01				2.39
Allowance for loan losses to non-performing loans, excluding loans held-for-sale			91.86				96.33				100.19

Refer to Table H for additional information.

 

Provision for Loan Losses
(Unaudited)		Quarters ended												Nine months ended
(In thousands)		30-Sep-19				30-Jun-19				30-Sep-18				30-Sep-19				30-Sep-18
Provision for loan losses:
BPPR		$	34,479			$	28,975			$	51,877			$	94,908			$	153,000
Popular U.S.			2,060				11,216				2,510				23,647				30,774
Total provision for loan losses - non-covered loans		$	36,539			$	40,191			$	54,387			$	118,555			$	183,774
Provision for loan losses - covered loans			—				—				—				—				1,730
Total provision for loan losses		$	36,539			$	40,191			$	54,387			$	118,555			$	185,504

Credit Quality by Segment

 

(Unaudited)
(In thousands)		Quarters ended
BPPR		30-Sep-19				30-Jun-19				30-Sep-18
Provision for loan losses		$	34,479			$	28,975			$	51,877
Net charge-offs			59,900				37,167				58,846
Total non-performing loans held-in-portfolio			520,773				522,525				580,803
Allowance / loans held-in-portfolio			2.26	%			2.38	%			2.83	%
		Quarters ended
Popular U.S.		30-Sep-19				30-Jun-19				30-Sep-18
Provision for loan losses		$	2,060			$	11,216			$	2,510
Net charge-offs			7,940				9,986				4,841
Total non-performing loans held-in-portfolio			37,019				41,833				51,685
Allowance / loans held-in-portfolio			0.87	%			0.97	%			1.10	%

Preliminary impact estimate of the adoption of the current expected credit loss model (“CECL”)

The Corporation has continued its evaluation and implementation efforts with respect to CECL, in accordance with Accounting Standards Update (“ASU”) 2016-13, which will be effective on January 1, 2020. The ultimate impact on the Corporation of the adoption of CECL will depend on the composition of the Corporation’s portfolios as well as the economic conditions and forecast at the time of adoption.

Based on its preliminary analysis and the information currently available, utilizing loan balances and macroeconomic scenarios as of June 30, 2019, the Corporation expects that its allowance for loan and lease losses would increase by a range from $360 million to $400 million, or 85% to 95%, excluding purchased credit impaired loans. This increase is driven by the Puerto Rico mortgage, auto and credit cards loans portfolio. This increase would be reflected as a decrease to the opening balance of retained earnings, net of income taxes. Based on the Corporation’s preliminary estimates, assuming adoption at September 30, 2019, the day one impact of the adoption of CECL would result in a reduction in Tangible Book Value of approximately $3, or 5%.

The Corporation expects to continue to be well capitalized under the Basel III regulatory framework after the adoption of this standard. The Corporation will avail itself of the option to phase in over a period of three years the day one effects on regulatory capital from the adoption of CECL. Considering the phase in period provided by the regulatory framework, the estimated decrease to the Common Equity Tier One and Total Capital ratios would be of approximately 30 bps.

These estimates are preliminary and are subject to further work and analysis by the Corporation as part of its implementation efforts, including the consideration of qualitative factors, which may impact reserves, the review of significant assumptions and the model validation process.

Financial Condition Highlights

 

(Unaudited)
(In thousands)		30-Sep-19				30-Jun-19				30-Sep-18
Cash and money market investments		$	5,670,645			$	3,563,819			$	5,010,010
Investment securities			16,773,578				17,038,098				13,344,548
Loans			27,007,975				27,005,745				26,512,168
Total assets			52,480,415				50,617,221				47,919,428
Deposits			44,166,195				42,059,837				39,648,827
Borrowings			1,379,767				1,604,670				2,046,003
Total liabilities			46,571,967				44,897,387				42,675,079
Stockholders’ equity			5,908,448				5,719,834				5,244,349

Total assets increased by $1.9 billion from the second quarter of 2019, driven by:

 

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An increase of $2.1 billion in cash and money market investments, mainly due to an increase in Puerto Rico public sector deposits;

Partially offset by:

 

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A decrease of $0.3 billion in debt securities available-for-sale, mainly due to maturities and paydowns of mortgage-backed securities.

Total liabilities increased by $1.7 billion from the second quarter of 2019, mainly due to:

 

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An increase of $2.1 billion in deposits, mainly in Puerto Rico public sector deposits at BPPR;

Partially offset by:

 

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A decrease of $0.2 billion in other short-term borrowings due to maturities of Federal Home Loan Bank advances at PB; and

 

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A decrease of $0.2 billion in other liabilities due to purchases of securities transactions that settled during the quarter.

Stockholders’ equity increased by approximately $188.6 million from the second quarter of 2019, principally due to net income for the quarter of $165.3 million and higher unrealized gains on debt securities available-for-sale by $51.0 million, net of declared dividends of $29.0 million on common stock and $0.9 million in dividends on preferred stock.

Common equity tier-1 ratio (“CET1”), common equity per share and tangible book value per share were 17.46%, $60.57 and $53.41, respectively, at September 30, 2019, compared to 16.80%, $58.63 and $51.44 at June 30, 2019. Refer to Table A for capital ratios.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including without limitation those about Popular’s business, financial condition, results of operations, plans, objectives and future performance. These statements are not guarantees of future performance, are based on management’s current expectations and, by their nature, involve risks, uncertainties, estimates and assumptions. Potential factors, some of which are beyond the Corporation’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Risks and uncertainties include without limitation the effect of competitive and economic factors, and our reaction to those factors, the adequacy of the allowance for loan losses, delinquency trends, market risk and the impact of interest rate changes, capital market conditions, capital adequacy and liquidity, the effect of legal and regulatory proceedings and new accounting standards on the Corporation’s financial condition and results of operations. All statements contained herein that are not clearly historical in nature, are forward-looking, and the words “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project” and similar expressions, and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, are generally intended to identify forward-looking statements.

More information on the risks and important factors that could affect the Corporation’s future results and financial condition is included in our Annual Report on Form 10-K for the year ended December 31, 2018, our Form 10-Q for the quarters ended March 31, 2019, June 30, 2019, and in our Form 10-Q for the quarter ended September 30, 2019 to be filed with the Securities and Exchange Commission. Our filings are available on the Corporation’s website (www.popular.com) and on the Securities and Exchange Commission website (www.sec.gov). The Corporation assumes no obligation to update or revise any forward-looking statements or information which speak as of their respective dates.

About Popular, Inc.

Popular, Inc. is the leading financial institution in Puerto Rico, by both assets and deposits, and ranks among the top 50 U.S. bank holding companies by assets. Founded in 1893, Banco Popular de Puerto Rico, Popular’s principal subsidiary, provides retail, mortgage and commercial banking services in Puerto Rico and the U.S. Virgin Islands. Popular also offers auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. In the mainland United States, Popular provides retail, mortgage and commercial banking services through its New York-chartered banking subsidiary, Popular Bank, which has branches located in New York, New Jersey and Florida.

Conference Call

Popular will hold a conference call to discuss its financial results today Wednesday, October 23, 2019 at 11:00 a.m. Eastern Time. The call will be open to the public and broadcasted live over the Internet and can be accessed through the Investor Relations section of the Corporation’s website: www.popular.com.

Listeners are recommended to go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call may also be accessed through the dial-in telephone number 1-866-235-1201 or 1-412-902-4127. There is no charge to access the call.

A replay of the webcast will be archived in Popular’s website. A telephone replay will be available one hour after the end of the conference call through Saturday, November 23, 2019. The replay dial-in is: 1-877-344-7529 or 1-412-317-0088. The replay passcode is 10135336.

An electronic version of this press release can be found at the Corporation’s website: www.popular.com.

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table A - Selected Ratios and Other Information

Table B - Consolidated Statement of Operations

Table C - Consolidated Statement of Financial Condition

Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER

Table E - Consolidated Average Balances and Yield / Rate Analysis - YEAR-TO-DATE

Table F - Mortgage Banking Activities and Other Service Fees

Table G - Loans and Deposits

Table H - Non-Performing Assets

Table I - Activity in Non-Performing Loans

Table J - Allowance for Credit Losses, Net Charge-offs and Related Ratios

Table K - Allowance for Loan Losses - Breakdown of General and Specific Reserves - CONSOLIDATED

Table L - Allowance for Loan Losses - Breakdown of General and Specific Reserves - PUERTO RICO OPERATIONS

Table M - Allowance for Loan Losses - Breakdown of General and Specific Reserves - POPULAR U.S. OPERATIONS

Table N - Reconciliation to GAAP Financial Measures

POPULAR, INC.

Financial Supplement to Third Quarter 2019 Earnings Release

Table A - Selected Ratios and Other Information

(Unaudited)

 

		Quarters ended												Nine months ended
		30-Sep-19				30-Jun-19				30-Sep-18				30-Sep-19				30-Sep-18
Basic EPS		$	1.71			$	1.77			$	1.38			$	5.17			$	5.01
Diluted EPS		$	1.70			$	1.76			$	1.38			$	5.16			$	5.00
Average common shares outstanding			96,357,117				96,305,118				101,067,300				97,073,177				101,549,711
Average common shares outstanding - assuming dilution			96,478,327				96,457,448				101,249,154				97,212,396				101,731,930
Common shares outstanding at end of period			96,714,664				96,703,351				100,336,341				96,714,664				100,336,341
Market value per common share		$	54.08			$	54.24			$	51.25			$	54.08			$	51.25
Market capitalization - (In millions)		$	5,230			$	5,245			$	5,142			$	5,230			$	5,142
Return on average assets			1.29	%			1.38	%			1.17	%			1.35	%			1.48	%
Return on average common equity			11.44	%			12.31	%			10.10	%			11.96	%			12.72	%
Net interest margin			4.00	%			4.11	%			4.07	%			4.10	%			3.92	%
Common equity per share		$	60.57			$	58.63			$	51.77			$	60.57			$	51.77
Tangible common book value per common share (non-GAAP) [1]		$	53.41			$	51.44			$	44.62			$	53.41			$	44.62
Tangible common equity to tangible assets (non-GAAP) [1]			9.97	%			9.96	%			9.49	%			9.97	%			9.49	%
Tier 1 capital			17.46	%			16.80	%			16.19	%			17.46	%			16.19	%
Total capital			20.05	%			19.39	%			18.82	%			20.05	%			18.82	%
Tier 1 leverage			9.87	%			9.75	%			9.60	%			9.87	%			9.60	%
Common Equity Tier 1 capital			17.46	%			16.80	%			16.19	%			17.46	%			16.19	%

 

[1]	Refer to Table N for reconciliation to GAAP financial measures.

POPULAR, INC.

Financial Supplement to Third Quarter 2019 Earnings Release

Table B - Consolidated Statement of Operations

(Unaudited)

 

		Quarters ended								Variance				Quarter ended				Variance				Nine months ended
										Q3 2019								Q3 2019
(In thousands, except per share information)		30-Sep-19				30-Jun-19				vs. Q2 2019				30-Sep-18				vs. Q3 2018				30-Sep-19				30-Sep-18
Interest income:
Loans		$	453,315			$	454,204			$	(889	)		$	430,637			$	22,678			$	1,355,232			$	1,190,498
Money market investments			19,119				22,534				(3,415	)			27,581				(8,462	)			70,873				86,258
Investment securities			99,542				94,241				5,301				70,147				29,395				274,819				185,537
Total interest income			571,976				570,979				997				528,365				43,611				1,700,924				1,462,293
Interest expense:
Deposits			78,760				78,449				311				55,134				23,626				228,035				139,050
Short-term borrowings			1,572				1,656				(84	)			1,622				(50	)			4,828				5,387
Long-term debt			14,653				14,558				95				20,140				(5,487	)			43,791				59,204
Total interest expense			94,985				94,663				322				76,896				18,089				276,654				203,641
Net interest income			476,991				476,316				675				451,469				25,522				1,424,270				1,258,652
Provision for loan losses - non-covered loans			36,539				40,191				(3,652	)			54,387				(17,848	)			118,555				183,774
Provision for loan losses - covered loans			—				—				—				—				—				—				1,730
Net interest income after provision for loan losses			440,452				436,125				4,327				397,082				43,370				1,305,715				1,073,148
Service charges on deposit accounts			40,969				39,617				1,352				38,147				2,822				119,277				111,704
Other service fees			71,309				74,031				(2,722	)			64,316				6,993				209,647				187,794
Mortgage banking activities			10,492				(1,773	)			12,265				11,269				(777	)			18,645				33,408
Net loss on sale of debt securities			(20	)			—				(20	)			—				(20	)			(20	)			—
Net gain (loss), including impairment, on equity securities			213				528				(315	)			370				(157	)			2,174				(42	)
Net profit (loss) on trading account debt securities			295				422				(127	)			(122	)			417				977				(299	)
Adjustments (expense) to indemnity reserves on loans sold			(3,411	)			1,840				(5,251	)			(3,029	)			(382	)			(1,664	)			(6,482	)
FDIC loss-share income			—				—				—				—				—				—				94,725
Other operating income			22,865				23,661				(796	)			40,070				(17,205	)			68,432				78,519
Total non-interest income			142,712				138,326				4,386				151,021				(8,309	)			417,468				499,327
Operating expenses:
Personnel costs
Salaries			90,016				86,161				3,855				83,535				6,481				260,627				239,940
Commissions, incentives and other bonuses			22,360				22,636				(276	)			25,365				(3,005	)			70,757				66,685
Pension, postretirement and medical insurance			10,356				10,406				(50	)			8,670				1,686				30,523				27,962
Other personnel costs, including payroll taxes			24,950				22,296				2,654				22,187				2,763				70,391				55,354
Total personnel costs			147,682				141,499				6,183				139,757				7,925				432,298				389,941
Net occupancy expenses			24,595				23,299				1,296				18,602				5,993				71,431				63,829
Equipment expenses			21,596				21,323				273				18,303				3,293				62,624				53,284
Other taxes			14,028				12,577				1,451				11,923				2,105				38,267				33,701
Professional fees
Collections, appraisals and other credit related fees			4,131				4,741				(610	)			3,371				760				12,596				10,657
Programming, processing and other technology services			63,092				61,033				2,059				55,187				7,905				184,303				161,039
Legal fees, excluding collections			2,415				4,446				(2,031	)			4,284				(1,869	)			10,350				14,954
Other professional fees			28,923				25,028				3,895				21,018				7,905				74,026				74,098
Total professional fees			98,561				95,248				3,313				83,860				14,701				281,275				260,748
Communications			5,881				5,955				(74	)			6,054				(173	)			17,685				17,342
Business promotion			18,365				19,119				(754	)			15,478				2,887				52,158				44,265
FDIC deposit insurance			2,923				5,278				(2,355	)			8,610				(5,687	)			13,007				22,534
Other real estate owned (OREO) (recovery) expense			(185	)			1,237				(1,422	)			7,950				(8,135	)			3,729				21,028
Credit and debit card processing, volume, interchange and other expenses			9,450				9,900				(450	)			8,946				504				27,573				23,189
Other operating expenses
Operational losses			8,832				4,778				4,054				7,770				1,062				18,498				26,695
All other			22,348				20,431				1,917				35,860				(13,512	)			61,283				61,578
Total other operating expenses			31,180				25,209				5,971				43,630				(12,450	)			79,781				88,273
Amortization of intangibles			2,399				2,371				28				2,324				75				7,082				6,973
Total operating expenses			376,475				363,015				13,460				365,437				11,038				1,086,910				1,025,107
Income before income tax			206,689				211,436				(4,747	)			182,666				24,023				636,273				547,368
Income tax expense			41,370				40,330				1,040				42,018				(648	)			131,923				35,613
Net income		$	165,319			$	171,106			$	(5,787	)		$	140,648			$	24,671			$	504,350			$	511,755
Net income applicable to common stock		$	164,389			$	170,175			$	(5,786	)		$	139,718			$	24,671			$	501,558			$	508,963
Net income per common share - basic		$	1.71			$	1.77			$	(0.06	)		$	1.38			$	0.33			$	5.17			$	5.01
Net income per common share - diluted		$	1.70			$	1.76			$	(0.06	)		$	1.38			$	0.32			$	5.16			$	5.00
Dividends Declared per Common Share		$	0.30			$	0.30			$	—			$	0.25			$	0.05			$	0.90			$	0.75

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table C - Consolidated Statement of Financial Condition

(Unaudited)

 

														Variance
														Q3 2019 vs.
(In thousands)		30-Sep-19				30-Jun-19				30-Sep-18				Q2 2019
Assets:
Cash and due from banks		$	502,060			$	391,703			$	400,949			$	110,357
Money market investments			5,168,585				3,172,116				4,609,061				1,996,469
Trading account debt securities, at fair value			36,303				35,623				37,731				680
Debt securities available-for-sale, at fair value			16,479,110				16,734,722				13,047,617				(255,612	)
Debt securities held-to-maturity, at amortized cost			97,707				99,599				101,238				(1,892	)
Equity securities			160,458				168,154				157,962				(7,696	)
Loans held-for-sale, at lower of cost or fair value			56,370				54,028				51,742				2,342
Loans held-in-portfolio			27,181,241				27,171,467				26,661,951				9,774
Less: Unearned income			173,266				165,722				149,783				7,544
Allowance for loan losses			512,365				543,666				633,718				(31,301	)
Total loans held-in-portfolio, net			26,495,610				26,462,079				25,878,450				33,531
Premises and equipment, net			547,063				554,614				557,104				(7,551	)
Other real estate			117,928				118,851				133,780				(923	)
Accrued income receivable			164,778				170,886				163,443				(6,108	)
Mortgage servicing assets, at fair value			150,652				153,021				162,779				(2,369	)
Other assets			1,811,190				1,806,825				1,900,850				4,365
Goodwill			671,122				671,122				687,536				—
Other intangible assets			21,479				23,878				29,186				(2,399	)
Total assets		$	52,480,415			$	50,617,221			$	47,919,428			$	1,863,194
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing		$	8,771,970			$	8,955,304			$	8,803,752			$	(183,334	)
Interest bearing			35,394,225				33,104,533				30,845,075				2,289,692
Total deposits			44,166,195				42,059,837				39,648,827				2,106,358
Assets sold under agreements to repurchase			213,097				233,091				300,116				(19,994	)
Other short-term borrowings			—				160,000				1,200				(160,000	)
Notes payable			1,166,670				1,211,579				1,744,687				(44,909	)
Other liabilities			1,026,005				1,232,880				980,249				(206,875	)
Total liabilities			46,571,967				44,897,387				42,675,079				1,674,580
Stockholders’ equity:
Preferred stock			50,160				50,160				50,160				—
Common stock			1,044				1,044				1,043				—
Surplus			4,317,556				4,316,225				4,281,515				1,331
Retained earnings			2,071,198				1,935,826				1,629,692				135,372
Treasury stock			(392,630	)			(392,208	)			(183,872	)			(422	)
Accumulated other comprehensive loss, net of tax			(138,880	)			(191,213	)			(534,189	)			52,333
Total stockholders’ equity			5,908,448				5,719,834				5,244,349				188,614
Total liabilities and stockholders’ equity		$	52,480,415			$	50,617,221			$	47,919,428			$	1,863,194

Popular, Inc.

Financial Supplement to Third Quarter 2019 Earnings Release

Table D - Consolidated Average Balances and Yield / Rate Analysis - QUARTER

(Unaudited)

 

		Quarters ended																																				Variance
		30-Sep-19												30-Jun-19												30-Sep-18												Q3 2019 vs. Q2 2019												Q3 2019 vs. Q3 2018
($ amounts in millions; yields not on a taxable equivalent basis)		Average balance				Income / Expense				Yield / Rate				Average balance				Income / Expense				Yield / Rate				Average balance				Income / Expense				Yield / Rate				Average balance				Income / Expense				Yield / Rate				Average balance				Income / Expense				Yield / Rate
Assets:
Interest earning assets:
Money market, trading and investment securities		$	20,617			$	118.7				2.29	%		$	19,664			$	116.8				2.38	%		$	18,547			$	97.7				2.10	%		$	953			$	1.9				(0.09	)%		$	2,070			$	21.0				0.19	%
Loans not covered under loss sharing agreements with the FDIC:
Commercial			12,167				179.0				5.84				12,156				181.7				5.99				11,814				176.7				5.94				11				(2.7	)			(0.15	)			353				2.3				(0.10	)
Construction			809				13.3				6.50				806				13.5				6.74				932				15.2				6.45				3				(0.2	)			(0.24	)			(123	)			(1.9	)			0.05
Mortgage			7,127				91.2				5.12				7,113				91.2				5.13				7,142				90.3				5.06				14				—				(0.01	)			(15	)			0.9				0.06
Consumer			2,918				86.5				11.76				2,864				85.3				11.95				3,869				115.0				11.79				54				1.2				(0.19	)			(951	)			(28.5	)			(0.03	)
Auto			2,867				68.2				9.44				2,822				67.7				9.62				949				20.2				8.55				45				0.5				(0.18	)			1,918				48.0				0.89
Lease financing			1,004				15.1				6.03				972				14.8				6.07				885				13.3				5.99				32				0.3				(0.04	)			119				1.8				0.04
Total loans			26,892				453.3				6.70				26,733				454.2				6.81				25,591				430.7				6.69				159				(0.9	)			(0.11	)			1,301				22.6				0.01
Total interest earning assets		$	47,509			$	572.0				4.79	%		$	46,397			$	571.0				4.93	%		$	44,138			$	528.4				4.76	%		$	1,112				1.0				(0.14	)%		$	3,371			$	43.6				0.03	%
Allowance for loan losses			(532	)											(553	)											(639	)											21												107
Other non-interest earning assets			3,964												3,931												3,992												33												(28	)
Total average assets		$	50,941											$	49,775											$	47,491											$	1,166											$	3,450
Liabilities and Stockholders’ Equity:
Interest bearing deposits:
NOW and money market		$	15,958			$	37.7				0.94	%		$	14,953			$	39.3				1.05	%		$	13,201			$	23.0				0.69	%		$	1,005			$	(1.6	)			(0.11	)%		$	2,757			$	14.7				0.25	%
Savings			10,241				11.8				0.46				10,067				10.5				0.42				9,797				9.0				0.37				174				1.3				0.04				444				2.8				0.09
Time deposits			7,829				29.3				1.48				7,827				28.7				1.47				7,419				23.1				1.24				2				0.6				0.01				410				6.2				0.24
Total interest-bearing deposits			34,028				78.8				0.92				32,847				78.5				0.96				30,417				55.1				0.72				1,181				0.3				(0.04	)			3,611				23.7				0.20
Borrowings			1,440				16.2				4.51				1,448				16.2				4.50				1,861				21.8				4.68				(8	)			—				0.01				(421	)			(5.6	)			(0.17	)
Total interest-bearing liabilities			35,468				95.0				1.06				34,295				94.7				1.11				32,278				76.9				0.95				1,173				0.3				(0.05	)			3,190				18.1				0.11
Net interest spread											3.73	%											3.82	%											3.81	%											(0.09	)%											(0.08	)%
Non-interest bearing deposits			8,794												8,868												8,860												(74	)											(66	)
Other liabilities			926												1,016												816												(90	)											110
Stockholders’ equity			5,753												5,596												5,537												157												216
Total average liabilities and stockholders’ equity		$	50,941											$	49,775											$	47,491											$	1,166											$	3,450
Net interest income / margin non-taxable equivalent basis						$	477.0				4.00	%						$	476.3				4.11	%						$	451.5				4.07	%						$	0.7				(0.11	)%						$	25.5				(0.07	)%